01—Abstract
Summary
Summary of the 10-Q filed May 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Reliance, Inc. (formerly Reliance Steel & Aluminum Co.) reported net sales of $3,644.8 milliona for the first quarter of 2024, down from $3,965.3 million in the first quarter of 2023.
Operating income fell to $393.1 millionb from $513.6 million, and net income attributable to Reliance was $302.9 million, or $5.23 per diluted share, compared with $383.1 million, or $6.43 per diluted share, a year earlier. The filing attributes the decline mainly to lower metals prices and a decrease in tons sold, which was impacted by one less shipping day. Gross profit margin was 31.0% versus 30.9% a year earlier, which the company says was supported by its diversified business model and value-added processing.
Cash flow from operations was $126.3 millionc, down from $384.6 million, due to higher working capital spending and lower profitability. The company spent $108.7 million on capital expenditures and $53.7 million on an acquisition (Cooksey Steel) in the quarter, and ended the period with $934.9 million in cash and cash equivalents. Total debt principal was $1.15 billion, and the net debt-to-total capital ratio rose to 2.6% from 0.8% at December 31, 2023.
The Board declared a second-quarter 2024 dividend of $1.10d per share, and the company did not repurchase shares in the quarter, with $1.44 billion remaining under its share repurchase authorization. The company completed the Cooksey Steel acquisition in February 2024 and agreed to acquire American Alloy Steel and Mid-West Materials, both closed April 1, 2024, with no sales from those two businesses included in first-quarter results. The filing states there were no material changes to risk factors from the 2023 Form 10-K and that the company was in compliance with all financial maintenance covenants at March 31, 2024.
02—Key points
Key Highlights
- Net sales declined 8.1% to $3,644.8 million, with same-store net sales down 8.8%, driven by a 6.5% decline in same-store average selling price per ton and a 2.9% decline in same-store tons sold.
- Operating income fell 23.5% to $393.1 million, and operating margin declined to 10.8% from 13.0%.
- Diluted EPS was $5.23 versus $6.43 a year earlier; net income attributable to Reliance was $302.9 million versus $383.1 million.
- Gross profit margin held steady at 31.0% compared with 30.9% in the prior-year quarter.
- Operating cash flow was $126.3 million, down from $384.6 million, reflecting increased working capital spending and lower profitability.
- Cash and cash equivalents were $934.9 million at March 31, 2024; the $1.5 billion revolving credit facility had no outstanding borrowings.
- Quarterly dividend increased 10% to $1.10 per share, and the Board declared the second-quarter dividend on April 23, 2024; no shares were repurchased in the first quarter of 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 2, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.64B$3.97B | −8.1% |
| SG&A Expenses | $671.50M$651.30M | +3.1% |
| Operating Expenses | $3.25B$3.45B | −5.8% |
| Operating Income | $393.10M$513.60M | −23.5% |
| Interest Expense | $9.70M$10.90M | −11.0% |
| Net Income | $302.90M$383.10M | −20.9% |
| EPS (Basic) | $5.28$6.51 | −18.9% |
| EPS (Diluted) | $5.23$6.43 | −18.7% |
| Shares Outstanding (Basic) | 57.34M58.83M | −2.5% |
| Shares Outstanding (Diluted) | 57.88M59.53M | −2.8% |
05—Questions
Frequently Asked Questions
Why did Reliance's earnings decline in the first quarter of 2024?
The filing attributes the decline mainly to lower metals prices and a decrease in tons sold, which was impacted by one less shipping day. Diluted EPS fell to $5.23 from $6.43, while net sales fell to $3,644.8 million from $3,965.3 million. Gross profit margin remained roughly stable at 31.0%, but lower sales reduced gross profit and operating leverage on SG&A expense.
Is Reliance's balance sheet still strong?
The company reported $934.9 million in cash and cash equivalents and $1.15 billion in principal of senior unsecured notes, with no borrowings under its $1.5 billion revolving credit facility. The net debt-to-total capital ratio increased to 2.6% from 0.8% at December 31, 2023. The company states it was in compliance with all financial maintenance covenants at March 31, 2024, and that its investment grade credit ratings enhance its ability to raise capital.
What acquisitions did Reliance make, and how will they affect results?
Reliance acquired Cooksey Steel in February 2024 for $53.7 million in cash, which contributed $16.1 million of first-quarter net sales. American Alloy Steel and Mid-West Materials were acquired on April 1, 2024, with cash on hand; no sales from these two businesses were included in first-quarter results. The filing states that 2023 annual net sales were approximately $310 million for American Alloy and approximately $87 million for Mid-West Materials.
Will Reliance continue paying dividends and repurchasing shares?
On April 23, 2024, the Board declared a second-quarter 2024 cash dividend of $1.10 per share, payable June 7, 2024. The company has paid quarterly cash dividends for 65 consecutive years and has never reduced or suspended its regular quarterly dividend. No shares were repurchased in the first quarter of 2024, and $1.44 billion remained under the $1.5 billion share repurchase authorization as of March 31, 2024.
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